On 1 October 2019, company X (with a year-end as at 30th Sept) acquired an item of machinery for £10,720. During the year, the machinery had got damaged and was underperforming, although it was still being used. By 30 September 2020, following the damage, the item of machinery had an estimated remaining useful life of two years, a value in use of £6,300 and a fair value of £6,400. The costs to sell the item of machinery amounted to £500. Company X depreciates machinery on a reducing balance basis at a rate of 20% per annum. Compute the impairment loss in relation to the aforementioned item of machinery to be shown in company X’s income statement for the year ending 30th September 2020.
On 1 October 2019, company X (with a year-end as at 30th Sept) acquired an item of machinery for £10,720. During the year, the machinery had got damaged and was underperforming, although it was still being used. By 30 September 2020, following the damage, the item of machinery had an estimated remaining useful life of two years, a value in use of £6,300 and a fair value of £6,400. The costs to sell the item of machinery amounted to £500. Company X depreciates machinery on a reducing balance basis at a rate of 20% per annum. Compute the impairment loss in relation to the aforementioned item of machinery to be shown in company X’s income statement for the year ending 30th September 2020.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...
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On 1 October 2019, company X (with a year-end as at 30th Sept) acquired an item of machinery for
£10,720. During the year, the machinery had got damaged and was underperforming, although it was still
being used. By 30 September 2020, following the damage, the item of machinery had an estimated
remaining useful life of two years, a value in use of £6,300 and a fair value of £6,400. The costs to sell the
item of machinery amounted to £500. Company X
a rate of 20% per annum.
Compute the impairment loss in relation to the aforementioned item of machinery to be shown in company
X’s income statement for the year ending 30th September 2020.
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